5 ZARA“To bring high fashion apparel to the market at an affordable price”Amancio Ortega Gaono

6 Zara - History Ortega started business as a dress-makerFirst Zara store opened in La CoruñaZara extended presence in major Spanish citiesFirst store outside Spain was opened in Porto, PortugalExpanded internationally and diversified brand portfolio2,019 stores worldwide1963197519881990’s2015

7 Business Model Daily sales analysis Customer feedbackDelivery twice per weekConstant changes to the initial collection based on demandSmall production batches

10 60% of total production carried out in Spain and PortugalManufacturing60% of total production carried out in Spain and PortugalMore fashion-forward/detailed items - produced in-houseLess time-sensitive pieces - outsourcedSubcontracts some stages of process

11 Manufacturing ManufacturingThe cut pieces are bar-coded and distributed among 350 small workshops in Spain and northern Portugal for sewingFabrics are cut according to the prototype by automated cutting facilities

12 Manufacturing ManufacturingThe stitched garments are checked for quality, pressed, tagged, wrapped or kept on hangers, then sent to distribution centres

13 Zara Logistics, Arteixo500,000 ㎡Located centrally among 14 manufacturing plantsOwn railway track of 211kmManages 50% of women’s and men’s merchandiseServes Spain, Portugal, the Americans and Middle EastPlatform Europe, ZaragozaManages the remaining 50% of women’s and men’s merchandiseServes non-Iberian Europe, Russia, and AsiaZara Logistics, in ArteixoPlatform Europe, in ZaragozaOpened in 2002Meco, in MadridMost countries have small warehouses for extra or extra returned merchandise and inter-store transfersMeco, MadridManages children’s wear for all Zara storesDelivers all over the world

14 LogisticsFIGURESStrategy3 separate product lines(women, men, children)FrequencyTwice a weekDurationEurope: within 24h by truckOthers: within 2d by flightShipping Accuracy98.9%Optical scanning devices sorting out more than 6000 items per hourHigher level -> folded apparel in boxes -> belt system1Lower level -> garments on hangers, sorted based on styles -> belt system2routed by automatic routing devicespre-priced and labeled according to destinationItems have codes conveying to the staff where they need to be placedGarments are shipped out twice a weekAll products, regardless of their origin or destination, come to logistics centers in Spain before being sent to the stores

15 LogisticsORDERING CYCLESeason BeginningPerson in charge: HeadquartersItem: new collectionsQuantity: 25,000 unitsDuring SeasonPerson in charge : Store ManagerItem: replenishmentsQuantity: 12,000 units/week( 8,000 for women’s2,000 for men’s2,000 for children’s )All products, regardless of their origin or destination, come to logistics centers in Spain before being sent to the stores

16 Highly Automated Logistics RFIDOptical scanning device -> sorting 6000 items/hTwo levels of automated systemsAutomatic routing deviceOptical scanning devices sorting out more than 6000 items per hourHigher level -> folded apparel in boxes -> belt system1Lower level -> garments on hangers, sorted based on styles -> belt system2routed by automatic routing devicespre-priced and labeled according to destinationItems have codes conveying to the staff where they need to be placedGarments are shipped out twice a week

17 LogisticsOBJECTIVESTo ensure that there is always something new to offerTo respond to demand shifts during one seasonTo encourage consecutive visits(Zara customer:17 visits/yearOthers :4 visits/year)To pursue speed in sacrifice of freighting costAll products, regardless of their origin or destination, come to logistics centers in Spain before being sent to the stores

18 Logisticshttps://www.youtube.com/watch?v=iKUmOsmh-Gs

19 StoresOrganization StructureStores located in prime locationsMost of the stores owned by the companyStores all over the globe identical and modelled off of central designsWindow display crucial for attracting customersDisplay of clothes given prominence

20 Stores - Inventory ManagementOrganization StructureStore managers select about 800 designs out of the 2000 offered at the beginning of the seasonCustomer opinionSales successConstant feedback on customer opinion and sales success given to the design team

21 Fewer merchandize on discountStores - Inventory ManagementOrganization StructureEach item stocked in small quantities (3-5 units per size, per design)Inventories not renewed when an item is sold outFewer merchandize on discount

30 Better control and more responsive Highly flexible and fast AnalysisBetter control and more responsiveHighly flexible and fastConstant flow of InformationGlobal sourcing strategyLimited quantity production benefitsCentralised distribution centre benefitsEconomies of scale not possibleIncreasing costsInternational expansion cautioned

33 5. Outsource time-consuming work from store employees Future Development4. Advertising investment for market penetration and building up positive brand image-> penetration in big potential market like Asia/America5. Outsource time-consuming work from store employees-> e.g. processing deliveries6. Continuously work with academics in operation management and IT support-> to find the most efficient practice